Working Capital: The Money You Forgot About

When people plan a brewery, they think about equipment, premises, fit-out, maybe a few months of wages. What they almost never budget properly for is working capital — the cash you need just to operate the business day to day.

Working capital isn't glamorous. It doesn't buy you a shiny fermenter or a van with your logo on it. It's the money that sits in your bank account covering the gap between paying for things and getting paid for things. And in brewing, that gap is enormous.

Think about the timeline. You buy malt, hops, and yeast — payment due in 30 days if your supplier is generous. You brew the beer — that's a day. It ferments for one to four weeks depending on the style. It conditions for another week or two. You package it. You deliver it. You invoice. The customer pays in 30, 60, maybe 90 days — if they pay at all. From the moment you spend money on ingredients to the moment cash arrives in your account, you could be looking at three to four months. And during that time, you need to keep buying ingredients for the next batch, and the one after that.

Then there's stock. You will hold stock, and stock ties up money. Finished beer sitting in your cold store waiting for orders is money you've already spent on ingredients, packaging, and labour that isn't coming back yet. Raw materials on the shelf — sacks of malt, boxes of hops in the freezer, yeast in the fridge — that's all money sitting there doing nothing until it goes into a brew. The more beer you're producing, the more stock you hold at every stage, and the more cash is locked up.

Kegs and casks are another trap. Every keg out in the trade is your asset sitting on someone else's floor. A standard cask costs £60–80, a keg £100–150 or more. If you've got a hundred out in circulation — and you'll need that many surprisingly quickly — that's £10,000–15,000 of your money doing laps of the pub trade. Some come back promptly. Some don't come back for months. Some never come back at all.

None of this appears on most people's startup budgets. They work out how much the brewery costs to build and assume that's the number. It isn't. You need the brewery, plus enough cash to keep the business alive while money flows out faster than it flows in. Underfund this and you'll find yourself unable to buy ingredients for next week's brew because last month's invoices haven't been paid yet. That's not a theoretical risk — it's the most common cash-flow crisis in small brewing.